SUMMARY
Cars24’s ESOP cash-out scheme for its employees is worth INR 35 Cr
Swiggy and Meesho have also initiated an ESOP liquidation program worth around $7-9 Mn and $5 Mn respectively
Several Indian startups such as Unacademy, Zerodha, CarDekho, BharatPe, Vy Capital and Mobile Premier League have announced ESOP buybacks this year
Online used car marketplace Cars24 has joined foodtech unicorn Swiggy and online reseller network Meesho in offering an ESOP (employee stock ownership plan) cash-out scheme worth INR 35 Cr to its employees.
“Cars24 brings cheer to its employees this festive season by offering to buy up to 100% ESOPs worth INR 35 Cr. The initiative has been announced keeping in mind the support and trust that the employees showcased in the company during the difficult times,” a statement by the company revealed.
While Swiggy’s ESOP liquidation program was worth around INR 51-66 Cr, Meesho’s was pegged around INR 37 Cr.
Earlier this year, Cars24 had offered fully-vested ESOPs to its employees, equal to the salary deduction they chose voluntarily.
The current offer by Cars24 is of 3.3X more value of the contribution made by employees during voluntary salary deduction, the statement said, adding that employees can liquidate 100% of ESOPs granted against salary deduction. Besides, employees also have an option to cash out 30% of vested stocks issued earlier.
“2020 has been a difficult year for everybody with a lot of employees stepping in and contributing across the company. The ESOPs will help our employees enjoy the bonus and extra liquidity during the festive season after facing a tough time during the pandemic,” Cars24 CEO and cofounder Vikram Chopra said.
Since its inception, this is the third time the company is undertaking a liquidation event for employee stocks.
Cars24 is backed by investors like Sequoia India, Exor Seeds, Apoletto, Kingsway Capital, KCK, Unbound, and Moore Strategic Ventures.
Cars24, Swiggy and Meesho have joined several Indian startups who have initiated ESOP liquidation or buyback programs this year.
Last month, Bengaluru-based edtech platform and one of the latest entrants in the Indian unicorn club, Unacademy, announced an ESOP buyback program worth INR 25-30 Cr, which will take place in December this year.
Several Indian startups such as Zerodha, CarDekho, BharatPe, Vy Capital and Mobile Premier League (MPL) have announced ESOP buybacks this year. The buybacks assume more significance when they happen in a year where many Indian startups have witnessed a financial crunch amid the Covid-19 pandemic.
Why Startups Are Increasingly Keen On ESOP Buybacks
Recently, many startups have given ESOPs to their employees in order to retain talent and incentivise financially. “In the past, founders have often encashed some of their stock holdings during higher series investments. But ESOP encashment for employees has become popular only recently,” the founder of Thinvent Technologies and business consultant Saurabh Jain told Inc42.
ESOP buybacks is a relatively recent phenomenon with startups. The trend started in 2018 when Flipkart announced a 100% buyback option of vested ESOPs. “It helps startups to garner experienced people from the market & also motivate its own employee by retaining good talents in the company,” Noida-based financial advisor Harsh Chaturvedi told Inc42.
